Image Source: Pixabay

Background:

Recently Infosys chairman Mr. N.R. Narayana Murthy sparked a debate by urging young Indians to work 70 hours per week, to develop the country. He cited Japan and Germany as examples of countries that grew because their citizens worked harder and for longer hours to rebuild their nations in the aftermath of the Second World War, and further noted that India's worker productivity is one of the lowest in the world. While this received support from some of the leading entrepreneurs, it also received criticism from others.

The Productivity argument:

Now, let us look at the productivity argument. Productivity refers to how efficiently resources are used. Labour productivity is calculated by dividing the output by the amount of labour used to generate that output. The question is, how do we increase labour productivity? Productivity increases are a result of technological changes (better machines, better material inputs) and management improvements (production planning, marketing strategies). Labour productivity measures the hourly output of a country's economy. Specifically, it indicates the amount of real gross domestic product (GDP) produced by an hour of labour. According to experts, growth in labour productivity depends on three main factors, saving and investment in physical capital, new technology, and human capital.

Some critics point out that India has been and continues to be a surplus labour economy and there is no incentive for the entrepreneur class to invest wisely in productivity-enhancing technologies. Another, source of technological change is when technology is procured from foreign sources for production to cater to either domestic or external markets. A good example is our software industry. In such situations, there is improvement in labour productivity but this remains restricted to that sector. Maybe this is one reason for the Infosys founder's concern.

Does higher labour productivity result in higher wages? Depends. Since often the installation of technology initially involves a higher fixed cost and better-skilled labour to work on it to increase productivity. This to some extent benefits the better skilled person. Also, if the workers who have a union have better bargaining strength, then it benefits the Labour class (here by Labour class we mean all working class). With the wave of globalisation and economic reforms, the trade unions' strength across the Industry has come down. Overall, the productivity goes up, the ultimate benefit goes to the producer/Owner where which results in reduced cost, more production, and more returns. Does it make a change in the life of a worker, will it lower the working hours, or will it increase the wages? Not conclusive, studies show it probably in replacing the worker and more hours for the existing workforce and provides an opportunity for better-skilled labour.

Productivity vs Productive Life:

Experts have written about the health consequences and burning out. Others have pointed to diminishing returns – longer hours reduce productivity and yet others have pointed to how this violates safety norms and labour and industry regulations in the country. Yet others have pointed to human rights, and workers' movements that fought for an 8-hour work day. Women and their role as workers and homemakers, the challenges of those with multiple jobs, and so on. Apart from pointing to the fact that a large number of Indians already work for long hours, interesting and valid arguments have been made since the interview criticising Mr. Murthy's suggestions of a 70-hour work day. They point out the paradox of the existence of long hours of work often under conditions of drudgery on the one hand and productivity challenges on the other. The need therefore would be to increase work productivity and if anything, reduce the number of hours of work. Countries such as Japan and Germany did indeed see a rise in average working hours, after the Second World War. Most countries that began to industrialize early saw the average number of hours clocked in by their workers decline steadily over the years as economic output and living standards rose. But this rise in annual working hours does not explain why these countries grew rich while other developing countries stayed poor. Germany saw its annual average working hours per worker figure steadily decline from 1950 onwards. Yet German per capita income grew steadily in the second half of the 21st century. From the 1960s, the annual average working hours of the Japanese started to gradually decline each decade yet growth did not suffer until much later. In 2017, annual working hours stood at 2,117 hours in India versus 1,738 hours and 1,354 hours in Japan and Germany, respectively.

According to experts, Indian workers, do not lag behind other countries when it comes to clocking in long hours at work. What they lack is sufficient capital that can help boost their productivity. Building capital to boost worker productivity requires investments, which are funded by savings.

Indians are already among the hardest workers in the world, averaging 47.7 hours per week per employed person, according to International Labour Organisation data updated in 2023. If compared with the 10 biggest economies, Indians have the longest average work week. According to Swiss bank UBS’ Price And Earnings Report 2018. Mumbaikars clock in at 3,315 hours a year—the most among the 77 cities around the world surveyed—while New Delhi comes in fourth. Indians already work longer hours than most. The Indian government's time-use survey in 2019 found that men between the ages of 15 and 59 in urban India spent an average of 521 minutes a day in paid employment. That translates to over 60 hours a week.

Efficiency Vs. Productivity:

Next comes the issue of Efficiency Vs. Productivity. Many of us use "efficiency" and "productivity" interchangeably. But did you know that while the two go hand in hand, they are entirely different concepts? Productivity refers to the amount of work you can complete in a specific amount of time. Efficiency, on the other hand, focuses on achieving the same amount of work with fewer resources. So, while productivity focuses on quantity, efficiency focuses on measuring quality. By increasing productivity, you can complete more projects in the same timeframe. Boosting efficiency means using fewer resources to accomplish the same amount of work.

Now let us look  at the economic theory of Labour  vs Leisure

Labour-Leisure Choices:

Economists and other domain experts have deeply discussed and provided theories to understand the Labour- Leisure issue. Management experts have been debating the issue of Work-Life Balance. According to them, people do not obtain utility just from products they purchase. They also obtain utility from leisure time. Leisure time is time not spent at work. The decision-making process of a utility-maximizing household applies to what quantity of hours to work in much the same way that it applies to purchases of goods and services. Choices made along the labour-leisure budget constraint, as wages shift, can be described by the labour supply curve.

A Backward-Bending Supply Curve of Labour has a vertical axis is wage and a horizontal axis is hours of labour. The bottom upward-sloping portion of the labour supply curve shows that as wages increase over this range, the quantity of hours worked also increases. The middle, nearly vertical portion of the labour supply curve shows that as wages increase over this range, the number of hours worked changes very little. The backward-bending portion of the labour supply curve at the top shows that as wages increase over this range, the number of hours worked decreases. All three of these possibilities can be derived from how a change in wages causes movement in the labour-leisure budget constraint, and thus different choices by individuals.

In 2018, following three 24-hour strikes at companies including Daimler (DMLRY), Siemens (SMEGF), and Airbus (EADSF), Europe's largest industrial labor union, IG Metall, in an agreement with employers, secured for each German metal worker the right to work less than the standard weekly hours of 35 and as few as 28 hours a week, if a worker so chooses. Those who work fewer hours will be paid only for hours worked, so they will see their weekly earnings fall below those who work longer.

Work-Life Balance:

The balance Theory emphasized the impact of work on job stress; other worker outcomes were later described such as job satisfaction, and worker health, safety, and well-being. Kirchmeyer defined work-life balance as achieving satisfying experiences in all life domains with personal resources such as energy, time, and commitment well distributed across domains.

Way forward:

The demand for faster simplification of labour laws has become louder in parallel to the demand for more hours/productivity by corporate leaders. Experts believe that easing labour laws coupled with lower tax rates and technology will help boost India’s economic growth. The World Economic Forum suggests India must improve its product market efficiency, which is undermined by a lack of trade openness. Further, it said that India's labour market is characterized by a lack of worker rights protections, insufficient labour market policies, and low participation of women. The government of India is making efforts to ease labour regulations. It plans to merge nearly 40 labour laws into four codes. One of them—the Code on Wages Bill, 2019—has been approved by the Indian Parliament.

The emergence of new technology such as AI and its adoption by Industry can be a boon and Challenge for Industry and the Labour class (including all the White-collar service and Blue-collar). Advances in AI, machine learning, robotics, and other technologies have increased the pace of change many times. According to experts, beyond the professional impact, there are profound impacts on personal life and well-being. The real challenge is that the Government and Industry need to adopt policies that would support the sustainability and interest of the Industry and Labour and equally enhance productivity.

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